Posted by flexo-notaries flexo-graphex inc on 9/8/07 9:48am
Msg #209910

Deliquency Rates on Mortgages

Interesting figures.
http://www.mortgagenewsdaily.com/972007_Delinquent_Mortgage.asp

Reply by CJ on 9/8/07 10:43am
Msg #209915

So ARMs are a big contributor . . .

I signed a LOT of ARMs that start at 1%, but jump up to 7 or 8 on the first payment. Then they adjust every month, but the payment only adjusted ever year. The payment were "minimum", which looked good, but they were really negative amatorization. They had a 3 year PPP. The yearly payments on the TIL (which of course is no gurantee) would be something like this: $700, $800, 900, $3,000, $3500. These were poor people who had the big truck, boats and toys, and maxed out every dime they had. I knew they were in huge trouble.

We had a radio show that was on Saturdays, from a local mortgage company. I would listen to it while I drove around. It REALLY burned me up. They would say, "No, you don't want a FIXED loan, you want an ARM! Don't pay off your house: you could be taking that equity and INVESTING it by remodling the kitchen! Intererst rates could go down!" I knew interest rates were going up, and ARM people were in trouble .

That's how I see things.

Reply by PAW on 9/8/07 11:22am
Msg #209919

Depends on the market

When the housing market was strong, values increasing and mortgage rates are low, it makes a lot of sense to use an ARM instead of a fixed rate. And when home prices are increasing at more than 20% a year, not paying off the mortgage made sense too. But, as no one could fortell the future, things turned around in the marketplace too face for people to react to the refi ARM to fix before the price fell out. That coupled with mortgage companies and lenders allowing more than 95% LTV on many loans, left the homeowner holding the bag that was getting very expensive. The cost of the loan increased much faster than the income increase (if any) of most workers, so it became more and more difficult to pay the mortgage.

Short sales have almost become as popular as buying a new car. In all my years, I cannot recollect any time when banks, mortgage companies and even private lenders, would accept as many (or in some case, any) short sales rather than being stuck with the property.

Reply by Carole Breckbill on 9/8/07 12:56pm
Msg #209928

Re: Depends on the market

You can also see the effects Wall Street has had bundling these and selling them as investments. REITS were a bad word back in the '70s but real estate has been considered a very important part of one's investment portfolio in the past 10-15 years. I'll be glad when this cycle is over and the home loan industry settles down. And it will. Maybe our local banks will even take an interest in their communities again. Right now, they don't "own" the problem, but I hope they will help facilitate the solution and we will see a lot of appropriate refies in the short term.

Reply by JanetK_CA on 9/9/07 5:54pm
Msg #210044

Re: Depends on the market

So true! And how many times have we all heard LOs promising their clients that they could always refinance again before the loan reset or when interest rates started going up too high. I'd be in fat city if I had $100 for every time I've heard a borrower say "Oh, we'll refinance before then anyway..." Some of them will, but all too many, as we now know, won't be able to.